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CMA Intermediate · Direct and Indirect Taxation · Set off and Carry Forward of Losses

For a company, under the Income-tax Act, 2025, a loss computed in a speculation business in a tax year can be set off in that year only against:

A speculation business loss can be set off only against profits and gains of another speculation business. The Act restricts it to that class, so it cannot reduce normal business income, capital gains or income from other sources in the same year.

  1. AProfits and gains of another speculation businessCorrect
  2. BProfits and gains of any non-speculation business
  3. CIncome under the head Capital gains
  4. DIncome under the head Income from other sources

Explanation

Section 113(1) provides that a speculation business loss is set off only against profits and gains of another speculation business. Setting it off against normal business profits, capital gains or other sources income is not permitted.

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